1. Statement of the Technical Field
The present invention relates to the field of investment and deposit funding, and more particularly to the management of agreed upon minimum levels of large deposits in Federal Deposit Insurance Corporation (FDIC) insured banks and savings and loan institutions.
2. Description of the Related Art
Under United States banking law, a bank deposit is supported by the full faith and credit of the United States Government so long as the amount of the deposit in the bank does not exceed the Federal deposit insurance limit of one-hundred thousand dollars ($100,000). The Federal Deposit Insurance Corporation (“FDIC”) is a federal governmental entity charged with implementing the foregoing guarantee by providing insurance for deposits in all Federal and State licensed banks and savings institutions in the United States. Generally, bank deposits are insured by the FDIC Bank Insurance Fund (“BIF”) and the deposits of savings institutions are insured by the FDIC Savings Association Insurance Fund (“SAIF”).
The law and resulting administrative regulations governing the insurance of deposits within banking institutions insured by the BIF and the SAIF are identical. In both cases, the FDIC bases insurance coverage on the concept of ownership rights and capacities. Specifically, funds held in different ownership categories are insured separately from each other, and funds of the same ownership but held in different accounts are subsumed under the same insurance coverage. Regardless, the amount of insurance covered provided to depositors of each institution insured by BIF and SAIF is the same: $100,000 to the owner(s) of the funds in the account(s), including principal and interest.
As a result of the FDIC structure of insurance, investors holding funds which substantially exceed the $100,000 FDIC insurance limit generally do not utilize the bank deposit vehicle. In particular, investors holding funds which exceed $100,000 avoid cash deposits because the amount of funds which exceed the $100,000 limit must be distributed across so many different banks so as to render the exercise burdensome in establishing the accounts and even more burdensome in maintaining the different accounts.
To address the foregoing deficiencies of the banking system, U.S. patent application Ser. No. 10/326,937 entitled Certificate of Deposit Agency Portfolio System and Method by Jorge H. Coloma (hereinafter, the “CDAP System”), teaches a computerized system for managing the distribution of large deposits across multiple banks in order to facilitate deposits by large institutional sources of capital while maintaining FDIC insurance for the $100,000 elements of the deposit. So much has been legally confirmed by the FDIC that the CDAP System would allow for the “pass through” of FDIC insurance to depositors.
However, for large institutional short term (money market) deposits, since the funds must remain available for withdrawal at any time on demand, and carry a higher, more competitive rate of interest required for institutional investors, normal deposit structures under the CDAP System are not generally attractive to a large number banks. In order to make the CDAP System for institutional deposits acceptable to a large number of banks, the deposits must be managed in such a way so as to enable the offering of a longer term commitment of funds to bank issuers. The longer term commitment of funds to a bank issuer would render the deposits more attractive since the deposits would be more reliable and the bank could achieve a greater “time value of money” in order to justify the payment of a higher rate of return than ordinarily provided for short term funds.